South Africa: Developments In Africa’s Competition Law

Last Updated: 27 May 2014
Article by Tamara Dini

Competition law developments in Africa continue to be closely monitored globally. Regional competition law in Africa took the spotlight in 2013, with the COMESA Competition Commission (the "CCC") commencing operations on 14 January 2013.

The CCC's initial year was not without serious challenges.

In particular, the international business and legal community raised concerns about the merger filing thresholds being set at nil and the high filing fees payable for merger notifications to the CCC; certain regulators within the COMESA region itself have not accepted the CCC as a "one stop shop" for merger notifications; and the COMESA Competition Regulations (the "Regulations") are dated and unclear in many respects, making their interpretation and application problematic.

Despite the large number of merger transactions that the Regulations purport to catch on the CCC's interpretation and with thresholds set at nil, during its first year of operation the CCC received only 11 merger notifications. The relatively low number of filings raises the question of whether merging parties are adopting a "wait and see" approach, given the lack of certainty and the various concerns raised, rather than submitting merger filings which are subject to potentially exorbitant filing fees.

However, the CCC has recognised many of the concerns raised over the last year and has entered into a Cooperation Agreement with the International Finance Corporation to engage a consultant to revised the merger provisions of the Regulations. Among the issues the consultant will be considering are the notification thresholds, merger filing fees, the scope of application of the Regulations as well as other areas of the regime in need of amendment. The consultant's proposals will be presented to the Council of Ministers (which sits annually) and the proposals are expected to be presented in the first quarter of the year. Significant developments to the COMESA regime are thus expected during 2014. The effectiveness of the changes to be introduced is likely to impact on the credibility of the regime going forward.

The CCC's focus thus far has been on mergers but the Regulations also deal with prohibited practices and consumer protection. These areas may become more important over time, provided that the CCC has a large enough staff complement to tackle these issues on a regional level. Currently the CCC comprises fewer than 20 officials and additional resources at the CCC would be required for the agency to enforce other areas of the Regulations.

Senior appointments at other competition agencies in Africa have also featured over 2013. In Tanzania, Dr Frederick Ringo was appointed Director-General of the Fair Competition Commission (the "FCC") for a period of 4 years, with effect from 1 August 2013. Dr Ringo is a corporate lawyer with over 20 years' experience in a vast range of areas of corporate and commercial law. including banking and finance, tax, project finance, public-private partnerships, corporate restructuring, privatisation and insolvency, litigation and dispute resolution projects.

In South Africa, the Competition Commission (the "Commission") has seen a number of moves at a senior level. Competition Commissioner Shan Ramburuth resigned towards the end of October 2013 and former Deputy Commissioner, Tembinkosi Bonakele, was appointed as Acting Commissioner for a period of six months. In December 2013, Manager of Mergers, Ibrahim Bah, resigned and has not since been replaced. The Commission announced the appointment of three new senior officials with effect from 1 January 2014. Liberty Mncube has been appointed as Chief Economist and Manager of the Policy and Research division, Junior Khumalo as Divisional Manager of Enforcement and Exemptions and Thomas Kgokolo as Chief Financial Officer. Clint Oellermann, former Manager of Enforcement and Exemptions, moves to the Commissioner's Office as manager responsible for strategy, monitoring and evaluations as well as strategic relations. Tembinkosi Bonakele, acting Competition Commissioner, welcomed the new members of the Commission's Executive Committee, saying that he was confident that they will provide the necessary leadership to their divisions. The Commission has featured a high staff turnover for a number of years and previously the Public Protector's office was also asked to investigate alleged maladministration, financial mismanagement and victimisation. It is hoped that the appointment of new members of management, who will present strong leadership at the agency, will contribute to staff retention and the agency's institutional memory.

Other African competition law regimes continue to develop and increase their activities. For a relatively new regime, Botswana's Competition Authority (which was established in 2010) has been active. The Competition Authority issued 19 merger decisions in 2013. Investigations of prohibited practices are also underway and the Competition Authority has published a guideline on the imposition of penalties. While Botswana does not yet have a leniency policy in place, Thula Kaira, CEO of the Competition Authority, indicated in 2012 that the Competition Authority would, in principle, use the SADC Guidance Note on Leniency Programs and in 2013 a draft corporate leniency policy was prepared. Once the corporate leniency policy is adopted, an increase in cartel detection and investigations in Botswana is likely. Mozambique joined the ranks of African countries with competition law in 2013, introducing competition legislation with effect from July 2013. However, the Competition Regulatory Authority required to enforce the new law has not yet been established. A task team comprising members of the public and private sectors has been established to design the framework for the Competition Regulatory Authority. The task team plans to meet with other competition authorities, including the South African competition authorities, in this regard.

There remain many challenges for African competition law in the years to come. Many regulators face staff shortages, budget constraints and low institutional support. For businesses, competition law in Africa often presents uncertainties and a lack of harmony between the many regimes – some jurisdictions have merger control regimes and others do not; some have effectively enforced legislation, while others lack any meaningful enforcement; some have cumbersome procedural requirements and extensive time periods for authorities' actions, while others tend to be more efficient.

The strengthening of competition law institutions through regulators' cooperation and achieving a degree of convergence through the application of international best practices would certainly promote effectiveness and efficiency to the benefit of agencies themselves and business. A level of agency cooperation and convergence would improve enforcement and know-how at a national level. It would also lead to more predictability, which would assist businesses active in Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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